The recent rise in shares of Blue (BLUE4) was not enough to convince analysts of the BofA (Bank of America) of the paper’s growth potential.
After the company’s results in the fourth quarter of 2022 and the news of the renegotiation with aircraft lessors, the assets jumped by more than 50% in one day. Considering the accumulated result for the last month, Azul rose 66%.
Despite this, the BofA maintained its rating of “underperform” (expected performance below the market average) for the shares, but raised the target price to BRL 11.80, compared to BRL 10.7 previously.
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According to the bank’s analysts, the renegotiation of Azul’s debt does not seem to define a cut in the amounts payable, but determines a delay in payment and a conversion of future debt/payments into equity on “potentially favorable” terms.
Overall, the agreement with aircraft lessors responsible for 90% of its lease liabilities brought about a “favorable dilution in Azul’s equity instrument and an expected reduction in lease expenses”.
In the company’s result in 4Q22, an Ebitda (earnings before interest, taxes, depreciation and amortization) of R$ 3.2 billion was recorded in the accumulated of 2022, more than 100% higher than the previous year.
Considering Azul’s results and its debt restructuring, BofA calculated a 50% price premium on the equity instrument and a 10% drop in rent expenses.
Thus, analysts expect an Ebitda of BRL 6.6 billion in 2024, assuming a capital increase of BRL 3.1 billion in the restructuring of Azul.
However, the bank expects “a long and bumpy road to full recovery” for the company, with the relationship between supply/demand and the volatility of the Brazilian currency as the main risks. For this reason, analysts opted to maintain the “low performance” classification for Azul.
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Source: Moneytimes
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